• May 25, 2024
  • Last Update May 25, 2024 9:23 PM
  • Nairobi

Finance Bill 2024: Inside new tax proposals by Treasury

Finance Bill 2024: Inside new tax proposals by Treasury

By Patricia Mollyne Mataga

Kenyans are staring at yet another round of new taxation under the Kenya Kwanza regime. This follows the publication of the 2024 Finance Bill.

The bill has multiple new tax proposals that will have a direct impact on the cost of various goods and services.

However, the proposed new taxes will be subjected to mandatory public participation with the National Assembly having the final say.

We take a look at some of the new taxes Kenyans will pay if the proposals are adopted by Members of Parliament.

Motor vehicle tax

The Treasury has proposed the introduction of a motor vehicle tax that will be payable on each motor vehicle at the time of issuance of an insurance cover.

The amount of tax to be paid will depend on the value of the motor vehicle but it shall not be less than Ksh5,000 and not more than Ksh100,000.

“The value of a motor vehicle shall be determined on the basis of the make, model, engine capacity and year of manufacture,” read part of the proposed 2024 Finance Bill.

The tax will be collected and paid by an insurer with a provision that an insurer who fails to collect and remit the motor vehicle tax shall be liable to pay a penalty equivalent to 50 per cent of the uncollected tax and the actual amount of the uncollected tax.

Withholding tax

Goods supplied to public entities will attract a withholding tax of 3 per cent for residents and 5 per cent for non-residents if the bill is passed without any amendment.

VAT on betting, gaming

The 2024 Finance Bill has proposed removing betting, gaming and lottery services from the list of those exempted from paying Value Added Tax (VAT).

This means the services will now attract a 16 per cent VAT.

In addition, there is a proposal for an increase of excise duty on betting, gaming, prize competition and lottery from 12.5 per cent to 20 per cent.

However, charitable rotaries have been excluded from the proposed increased excise duty,

Digital tax

Operators of digital platforms or those monetizing digital content will face a 20% tax for non-residents and 5% for residents in the new proposal.

There is also a shift from a Digital Service Tax to a Significant Economic Presence Tax at 30% for certain non-residents.

Tax on bread and milk

The cost of basic commodities such as bread and milk is also set to be affected courtesy of the Finance Bill 2024. The bill proposes removing the two products among those that do not attract tax.

Should the proposal be adopted, milk and bread will attract a 16 per cent VAT, which will mean an increase in its prices.

But digital strategist Dennis Itumbi claims there is no new tax being introduced for bread.

“There is no tax on bread, milk, and UNGA…so it’s not true that the price of bread was raised by 16%,” Itumbi posted on his verified X handle.

Proposals in the 2024 Finance Bill have already attracted criticism, just as was the case last year.

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